Arriving in New Delhi for a three-day state visit, the PM said the rise of the Indian middle-class would play a big role in Australia's future.
She played down concerns by anti-nuclear campaigners that selling uranium would lead to a build up of weapons in Asia.
Pictures: Julia Gillard visits India
Ms Gillard said Australia would negotiate safeguards that would be backed by the International Atomic Energy Agency.
She said Australian uranium would only be used for peaceful purposes and it was in India's interests to have a robust and safe nuclear industry.
The PM said Labor's previous ban on uranium sales to India "had become an obstacle in our relationship".
Australia is already a big supplier of education services with high numbers of Indian students in Australia.
But the PM believes the uranium deal will open the way to selling expertise in health, legal, financial services, technical innovation and water technology.
Ms Gillard said Australia and India had a history of shared values and strategic interests and it was time to broaden and deepen ties.
"This is a very important relationship for Australia," she said.
"India is one of those nations that in our region of the world in this Asian century we will see grow spectacularly in economic weight, we will see the rise of its middle-class."
Ms Gillard's visit will aim to boost wider business and cultural ties with the world's largest democracy and massively growing economy of 1.3 billion people.
Trucking boss Lindsay Fox is leading a business delegation which includes ANZ chief Mike Smith and Rio Tinto's Sam Walsh.
Relations with India turned sour when Kevin Rudd cancelled talks about selling uranium after the Howard Government had backed the idea.
Trade Minister Craig Emerson yesterday admitted there "had been a difficulty in the relationship between Australia and India" over the uranium issue.
Dr Emerson said Ms Gillard's visit aimed to "deepen and enrich this relationship as part of our push on Australia in the Asian Century".
There is expected to be a big focus on India in the upcoming White Paper being prepared by Ken Henry.
Dr Emerson said India was "pleased" talks were back on after last year's ALP national conference voted to overturn the ban on uranium sales to India amid high emotion.
Three Cabinet ministers, including Right-winger Stephen Conroy who was in tears during the debate, voted against Ms Gillard.
Left-winger Doug Cameron said Labor's light on the hill would become a green pulsating nuclear light.
Dr Emerson said safeguards would be negotiated before any sale took place and it would "take time" to get it right.
The Government already has 22 agreements with other countries to sell uranium but India has not signed the Nuclear Non-Proliferation Treaty.
The Government wants the safeguards to have the same strict rules to make sure Australian uranium is only used for domestic energy purposes.
Australia has the world's largest deposits of uranium.
The International Campaign to Abolish Nuclear Weapons (ICAN) said India had nuclear weapons and it would be impossible to verify that Australian uranium was not diverted for weapons.
“If this deal goes ahead, Australian uranium will likely fuel – directly or indirectly – the build-up of nuclear arms in South Asia. India is still producing both highly enriched uranium and plutonium for weapons, expanding its nuclear arsenal and investing heavily in new nuclear-capable missiles and submarines,” said ICAN co-chair Dr Tilman Ruff.
“India used a reactor supplied by Canada and fuel provided by the US – both supplied only for peaceful purposes – to make the plutonium for its first nuclear bombs."
India is not a party to any nuclear disarmament treaty, and nuclear safeguards agreements don’t apply to India’s military facilities, meaning that it’s impossible to verify that Australian uranium is not diverted for weapons purposes.”
India has shot dead two anti-nuclear campaigners in recent weeks and there have been reports India's auditor-general raised safety concerns about a possible Chernobyl-style disaster.
Greens Senator Scott Ludlum said India was ranked 28 out of 32 countries for safety of its nuclear stockpile.
“The Prime Minister should put human rights and safety before uranium profits during her current visit to India,” Senator Ludlam said.
The Opposition supports selling uranium to India. Frontbencher Mitch Fifield said it would help increase living standards in India by providing cheap energy.
Australia's relationship with India also suffered a blow in 2009 when attacks against Indian students were labelled racial attacks and led to a storm of protest against Australia in the India media.
Ms Gillard made her first official visit to India in 2009 as Education Minister to try and address concerns.
The PM last night said she belived the problem had been fixed but would find out on this trip if there was any lingering strain.
"My sense is since then we have addressed those concerns," she said.
She told one story about how the community in Melbourne's west in her own electorate went out of their way to "strengthen their embrace of Indian students" after there had been an attack at Werribee train station.
"The Aussie character was on display as we responded to it," she said.